War-damage Insurance A Warning
Page 16
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THE Compensation (Defence) Act, 1939, lays down that the value of a vehicle, as assessed for part payment of compensation in impressment, is no more than it would have been had not the war affected prices of vehicles, used as well as new. In other words, the impressment officer, in determining the amount to be paid, may not make any allowance for that appreciation in value.
As an example, typical of many, a vehicle, bought two years and 10 months ago for £448, was deemed to be worth only £180, notwithstanding the fact that the owner would have to expend £650 to replace it. It is a fact that many small operators have been put out of business and their services lost to the war-transport effort as the direct result of the operation of this Act. With that aspect of the matter we have already dealt. Another new problem has arisen ; this is in cOnnection with the insurance of vehicles under the War Damage Act. There is an impression prevalent that, in calculating the value, of vehicles for insurance, the same scale of values must be used. That is entirely erroneous and, if acted upon, will involve the operators concerned in serious loss if the insured vehicles be lost as the result of enemy action, the compensation then claimable being assessed pro rata with the premium paid ; as a result the value stated in the proposal form will be insufficient to enable replacement to be' effected.
The Act requires the vehicles to be insured for their full current value, and operators are advised to inqUire how much it would cost them to replace at the time of the loss, less a reasonable amount for depreciation : compensation will not be sufficient to replace old vehicles by new.
The important point to remember is that the amount recovered cannot be more than the value for which insurance has been effected. It is therefore essential, when insuring, to determine present-day prices of replacement vehicles. This is not so easy but, according to fig-tires we have before us, the average increase in the prices of new vehicles, as compared with pre-war cost, is in the neighborhood of 80 per cent.